SALCON - Price Target News

Stock Name: SALCON
Company Name: SALCON BHD
Research House: OSK

Salcon Bhd
(April 6, 72.5 sen)
Buy at 72 sen, target price of 81 sen: In 2004, Salcon Bhd underwent a major change in substantial shareholders who initiated a revamp of its entire business structure. Its main shareholder, Naga Muhibbah Sdn Bhd, took over from previous shareholder Kumpulan Emas.

The makeover, which involved the divestment of various small businesses, one of which was insurance, led to Salcon refocusing on its core operations of water engineering and construction.

The latest change in Salcon also entails the inclusion of its China-related water and wastewater concession as part of its key operation.

Salcon's construction and engineering order book stood at RM1.2 billion as at end-FY09. Of this amount, the outstanding order book is worth RM576 million.

With its current tender book at RM1.5 billion, Salcon is poised to secure jobs worth RM300 million to RM450 million this year, based on its historical success rate of 20% to 30%. We see the construction and engineering division increasing revenue by 35.5% in FY10. Its order book could well enlarge in FY11 on the back of its growing exposure to overseas projects, namely in Thailand, Vietnam, India and Sri Lanka. Salcon has to date secured eight water and wastewater concessions, one of which is in Vietnam and the rest in China.

Apart from providing a recurring income, we see Salcon's concession holdings division contributing approximately 20% to 30% of its bottom line earnings every year. In the next two to three years, we see Salcon securing more China-related concessions.

We peg Salcon with a buy recommendation. We ascribe a 12-month target price of 81 sen for Salcon, which translates into an upside of 12.5% based on its current share price. The stock's target price is based on a sum-of-parts (SOP) approach valuing its concession operations at 41 sen with a weighted average cost of capital (WACC) of 12%, while applying a price earnings (PE) of nine times on its FY10 construction earnings per share (EPS) of four sen.

Our nine times construction PE is based on the average PE for small-cap construction companies - OSK Research, April 6


This article appeared in The Edge Financial Daily, April 7, 2010.

PROTON - Price Target News

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD
Research House: AMMB

KUALA LUMPUR: AmResearch reiterates its BUY rating on Proton Holdings (Proton) and raised its fair value (FV) to RM6.30/share from RM5.50/share previously. It said on Wednesday, April 7 the higher FV followed its upward revisions to its adjusted NTA projection - to factor in market value of Proton's Shah Alam assets. "Our valuation remains pegged to 0.8x FY11F adjusted NTA - which now stands at RM7.70/share," it said. AmResearch said its channel checks suggested possibilities of foreign carmakers taking up spare capacity and simultaneously, striking a strategic alliance with Proton. "We understand that Proton is in talks with a third OEM namely Mitsubishi, besides Renault and VW currently. "Negotiations with Mitsubishi goes beyond model specific developments and platform sharing that was agreed upon earlier," it added. Proton's manufacturing assets have turned increasingly strategic following growing interest by foreign carmakers to set up assembly operations in the country -and recent newsflows suggests VW is looking to finalise plans for a local assembly plant by end of 1H10. AmResearch said additionally, the Government's move to lift a freeze on manufacturing licenses for luxury passenger vehicles with engine capacities of 1.8 litres and above should attract interest from luxury makes in the country.

PETGAS - Price Target News

Stock Name: PETGAS
Company Name: PETRONAS GAS BHD
Research House: MAYBANK

Petronas Gas Bhd, Malaysia's state-controlled natural gas transmission company, was upgraded to "hold" from "sell" at Maybank Investment Bank Bhd, after concluding a new five-year delivery agreement.

Its share price forecast was raised to RM10.40 from RM8.80, Maybank said in a report today.

Meanwhile, RHB Research Institute Sdn Bhd raised Petronas Gas to "market perform" from "underperform" and increased its earnings estimates for the company.

The stock's fair value was raised to RM10.51 from RM9.72, RHB said in a report today. -- Bloomberg

PETGAS - Price Target News

Stock Name: PETGAS
Company Name: PETRONAS GAS BHD
Research House: OSK

KUALA LUMPUR:OSK Research has a Buy call on Petronas Gas at RM9.89 with a target price of RM13.81 as its longer term prospects seem even brighter. The research house said on Wednesday, April 7 the new gas processing and transmission agreement (GPTA) terms serve to prepare Petronas Gas to leverage on excess capacity in its gas pipeline network to generate additional revenue. "Management's revelation that a new LNG regasification plant will be built in Peninsular Malaysia also helps to assuage concerns that the peninsula's gas is running out while the new plant will ensure continued utilisation of Petronas Gas's GPPs and pipelines," it said. OSK Research said it maintained its earnings forecasts and above consensus target price of RM13.81. It said the company's management met with the investment community on Tuesday to provide more details on the revised GPTA terms, explain the rationale for the revision and map out Petronas Gas's future direction. The details unveiled by management include the scope of the 4 zones specified in the transportation tariff and confirmation of the previous gas price paid. Petronas Gas management also highlighted that the separation of the processing and transportation revenue paves the way for Petronas Gas's to act as an independent gas transportation company to any party who wishes to import gas into Malaysia in the future. "While our shorter term forecasts are unchanged, Petronas Gas's revelation of plans to build a LNG regasification plant in Peninsular Malaysia to ensure the continuity of gas supply - even as the offshore gas fields deplete - means that the GPPs and the PGU will continue to be utilised and PTG's business model is sustainable past the expiry of the GPTA in 2014," it said. This helps mitigate concerns of what Petronas Gas's business model would look like past 2014. In fact, PTG's business model of separating gas processing and transportation charges will enable it to capitalise on excess capacity in its pipelines for transporting gas even as it reaches maximum utilisation in the processing business. "While some have raised questions over the reasons why Petronas would give Petronas Gas such favourable terms, as reflected in the 37% jump in our net profit forecast for FY11, we would like to point out that the main reason for Petronas Gas's continued listing in Bursa Malaysia is to give Malaysians an opportunity to share the wealth of Petronas. "As such, we do not see these terms, which basically prepare Petronas Gas for a possible deregulated gas market, as being to the disadvantage of Petronas. Maintain Buy," it said.

SIME - Price Target News

Stock Name: SIME
Company Name: SIME DARBY BHD
Research House: OSK

Sime Darby Bhd
(April 6, RM8.76)
Maintain sell at RM8.75, target price of RM7.02: Sime Darby's conditions for its sale and purchase agreement (SPA) for Ramunia have been fulfilled, hence all parties involved will now take the necessary action to complete the acquisition.

Ramunia's fabrication capacity is estimated at 85,000 tonnes per annum. Assuming that its fabrication revenue was able to generate about RM15,000 per tonne, the total revenue contribution expected from this yard at full operational capacity would be about RM1.3 billion.

Also, if we assume an operating margin of 15%, this would contribute to about RM200 million annually.

Having said that, our estimation is only superficial as some higher margin oil and gas (O&G) products can generate operating margins of 20% to 30%.

However, we only expect this yard to achieve utilisation of about 30% in FY11. Our assumption is on the basis that Kencana's yard is currently about 50% utilised and assuming that Petronas and its production sharing contract (PSC) contractors dished out new fabrication contracts in 2H10, we believe that Kencana and MMHE would be the main beneficiaries given their delivery track record, while the balance of the jobs will flow down to other yards.

Also, we believe that the Ramunia yard will incur some start-up costs and go through a learning curve given its kick-start by a new management team.

Even assuming full utilisation of the Ramunia yard, the contribution to Sime's earnings will not be significant. The plantation segment is still the dominant contributor to Sime's earnings, making up 67% of 1HFY10 earnings before interest and tax (Ebit). If we factor in a crude palm oil (CPO) price of RM2,600 per tonne for CY10 and CY11, Sime's earnings would be bumped up to RM3 billion for FY10 and RM3.4 billion for FY11, which is slightly higher than consensus earnings.

At a CPO price RM2,600 per tonne, Sime's earnings per share (EPS) will be 52 sen for CY10, translating into a price-earnings ratio (PER) of 16.8 times. At our target PE of 15 times, Sime will be worth RM7.80, which is still below the current share price of RM8.75.

On the other hand, if Sime's PE can stretch to 20 times, it would be worth RM10.40. Hence, for investors to turn in a profit buying Sime at current levels, its PE needs to hit 20 times again with CPO at RM2,600. - OSK Research, April 6


This article appeared in The Edge Financial Daily, April 7, 2010.

TM - Price Target News

Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Research House: AMMB

KUALA LUMPUR: AmResearch has upgraded TELEKOM MALAYSIA BHD [] (TM) to a buy at RM3.50 with a higher fair value of RM3.90, and has also revised its earnings estimate for the company.

"We basically prefer TM in the current intense competition for space that is going on in the mobile broadband segment. This effectively puts risks to the established dividend policy of the others.

"TM on the other hand is insulated from this as it has set a minimum payout ratio of 20 sen per share," it said.

AmResearch said TM has the highest yield at 5.2% (versus Digi 5.1% and Maxis 4.7%).

"With this our neutral view on the sector remains.

"We are looking at broadband (both fixed line and mobile) to be the growth driver. We are upbeat on net addition of subscriber base. We have imputed more than 45% year-on-year subscriber growth for FY10," it said.

KINSTEL - Price Target News

Stock Name: KINSTEL
Company Name: KINSTEEL BHD
Research House: MAYBANK

Kinsteel Bhd
(April 6, RM1.04)
Upgrade to buy at RM1.03, target price raised to RM1.23: Kinsteel's share price fell 12% from its peak in January and was the worst-performing construction steel stock on a six-month basis. We upgrade Kinsteel to buy from hold, with a revised target price of RM1.23 (previously RM1.03), after raising our earnings forecasts and a higher eight times 2011 price-earnings ratio (PER) target on optimism for near-term margin growth.

We have turned positive on Kinsteel as its April-May 2010 billet deliveries have been sold forward at US$550 (RM1,765.50) per tonne (versus US$600 per tonne currently) but already reflecting the inflated iron ore costs.

Its current iron ore inventory, sufficient till June 2010, was procured at an average price of US$110 per tonne (versus 2Q10 quarterly contract of US$200 per tonne). The resulting margin expansion will be more than sufficient to compensate for a potential gas price hike.

With a three-month iron ore inventory in hand, Kinsteel will not commit to the 2Q10 iron ore contract (90% above 2009 annual benchmark of US$90 per tonne for iron ore pellet). The management may consider sourcing iron ore from domestic reserves which could have more favourable pricing. Our channel checks indicate that Malaysia has at least 50 million tonne of iron ore reserves. Perwaja consumes two million tonnes per annum, which would preserve margins for longer.

We think the shares offer a better risk reward ratio now, given higher steel prices, positive global steel fundamentals, and low foreign shareholding of less than 10% (3Q08: 25%). Our visit last week to Kinsteel's 37%-owned Perwaja steel plant (in Kemaman, Terengganu) with foreign fund managers was well received.

We raise our 2010 earnings per share (EPS) by 13% while that of 2011 is largely unchanged, reflecting latest steel prices and iron ore input costs. This upgrade brings our forecast to the top-range of broker estimates. - Maybank IB, April 6


This article appeared in The Edge Financial Daily, April 7, 2010.

TANJONG - Price Target News

Stock Name: TANJONG
Company Name: TANJONG PUBLIC LIMITED COMPANY
Research House: MAYBANK

Tanjong plc
(April 6, RM18.96)
Maintain buy at RM18.96, target price of RM19.10: Tanjong aims to double its power capacity as it sees plenty of potential for the power division, especially in the Middle East and North Africa. It aims to double its current 3,951MW of installed capacity over the next five years. However, this will not be at the expense of returns.

Shareholder value is still its paramount concern. Our RM19.10 per share target price does not include anything for new projects.

Many power projects, which had been held back amidst the financial turbulence last year, are now open for bidding. Tanjong's experience in greenfield development as well as its success in integrating new plant acquisitions stand it in good stead. A deal similar to the 895MW Globaleq acquisition in 2007 could add about RM1.80 per share to our revised net asset value (RNAV).

As for its Tropical Islands venture, operating losses have narrowed to €3 million to €4 million (RM12.9 million to RM17.2 million) per annum. Tanjong's developer joint-venture partner has completed 21 homes and is targeting another by summer-end. Profitability is contingent on more accommodation units being built.

However, Tanjong will not be injecting any further equity. It will seek partnerships. To this end, a development master plan is being prepared.

On its gaming plans, Tanjong's application for a new game, made a few months ago, is still pending. Elsewhere, the management is engaging the tote board, turf clubs and regulators on the issue of rising totalisator losses. Sports betting, if introduced, is unlikely to cannibalise the 4D game. The markets are different, and also, sports betting would not be entirely new. The licensed operator will likely take market share from the informal operators.

Tanjong has a solid platform for growth. We forecast RM1.5 billion per annum free cash flow (FCF) over the next three years. Maintaining the RM1 gross dividend per share (DPS) requires just RM302 million per annum. Gearing the balance up 70:30 gives the group a total RM12 billion of acquisition currency, sufficient for 2,500MW to 3,600MW at US$1 million (RM3.21 million) to US$1.5 million per MW. Its last acquisition of seven power plants from Globaleq in 2007 was at US$700,000 per MW. - Maybank IB, April 6


This article appeared in The Edge Financial Daily, April 7, 2010.

AZRB - Price Target News

Stock Name: AZRB
Company Name: AHMAD ZAKI RESOURCES BHD
Research House: OSK

Ahmad Zaki Resources Bhd (AZRB)
(April 5, 91.5 sen)
Maintain buy at 89 sen, target price lowered to RM1.16: Last Friday, AZRB announced that it had received a letter of award from Putrajaya Holdings Sdn Bhd for project "Block 1, Menara PJH, No 2, Persiaran Perdana, Precinct 2, 62100 Putrajaya" valued at RM60 million.

This announcement is not really a surprise as we had highlighted in our FY09 results review the possibility of AZRB winning it. The contract involves AZRB constructing some shoplots and an office, namely a three-storey building with a basement car park. The job will commence immediately and is scheduled for completion over the next 24 months to April 7, 2012.

From our tracking of contracts awarded on Bursa, the average domestic job size during 1Q10 stood at RM169 million in comparison to the same period in 2009 where the average size was RM183 million. As one of our key sector themes for 2010, we expect most jobs to be small in nature. Small-cap contractors such as AZRB are in the best position to benefit from this as their order books usually constitute job of this size namely between RM100 million and RM300 million.

Including this recent job win, we estimate AZRB's order book to date at more than RM1.3 billon. The management is guiding for a replenishment target of RM600 million for FY10, while our assumption stands at RM300 million. We gather that AZRB is eyeing a housing job in Terengganu worth RM100 million.

Recent media reports said that Perdana Parkcity Sdn Bhd, a subsidiary of the Samling Group, has shortlisted seven companies, including AZRB, to build a RM250 million hospital in Desa Parkcity. Apart from that, AZRB is also eyeing two private finance initiative-type (PFI) jobs. On the LRT extension worth RM5 billion ex land acquisition cost, AZRB has been prequalified and intends to participate in some civil works packages.

We maintain buy with a target price of RM1.16. For the sake of consistency, our target price for AZRB is based on 11 times FY10 earnings, previously we had used a blended approach using price-earnings ratio (PER) and price/book value (P/BV) multipliers. Our RM1.16 target price implies a decent 30.5% upside from current levels. - OSK Research, April 5


This article appeared in The Edge Financial Daily, April 6, 2010.

PETRA - Price Target News

Stock Name: PETRA
Company Name: PETRA PERDANA BHD
Research House: CIMB

Petra Perdana Bhd, a Malaysian oil and gas services provider, rose to a three-month high after CIMB Investment Bank Bhd increased the share price estimate to RM2 from RM1.82 on earnings prospects.

The stock surged 8.8 per cent to RM1.74 at 9:31 am local time in Kuala Lumpur trading, bound for its highest close since January 7. -- Bloomberg

SALCON - Price Target News

Stock Name: SALCON
Company Name: SALCON BHD
Research House: OSK

KUALA LUMPUR: OSK Research has initiated coverage of Slacon Bhd with a Buy at 81 sen as the company focuses on water engineering and water related concession. The research house said on Tuesday, April 6 that it sees Salcon supported by its growing CONSTRUCTION [] orderbook in the next few years and securing more water and wastewater concessions in China. "Seeing that its earnings will gradually improve in the coming years, we initiate coverage on Salcon with an SOP-derived target price of RM0.81 on the stock. BUY recommended," it said. OSK Research said it ascribed a 12-month target price of 81 sen for Salcon, which translates into an upside of 12.5% based on its current share price. It said the stock's target price is based on a sum-of-parts approach valuing its concession operations at RM0.41 (WACC; 12%) while applying a PE of 9 times on its FY10 construction EPS of 4 sen per share. Our 9.0 times construction PE is based on the average PE for small cap construction companies," it said.

WCT - Price Target News

Stock Name: WCT
Company Name: WCT BHD
Research House: HWANGDBS

Malaysian Resources Corp Bhd (MRCB)
(April 5, RM1.69)
Maintain buy at RM1.68, with a higher target price of RM2.25: Our view that minority shareholders should shun the conditional takeover offer at RM1.50 per share by the Employees Provident Fund (EPF) has turned out to be correct with MRCB's share price having overtaken the offer price.

Our reasoning was simple in that something was brewing when the majority shareholder sees more value in the stock by launching a GO (general offer) exercise.

The recent announcement by the prime minister that the EPF and the government will form a joint venture to develop the 3,400 acres (1,376ha) of RRIM land in Sungai Buloh has derailed the EPF's conditional takeover exercise. This is because MRCB's share price is clearly above RM1.50/share on expectations that MRCB will be formally appointed as the master developer of this land.

Nonetheless, we read the EPF's market moves as it being serious in seeing this conditional takeover materialise and it solidifying its shareholding prior to a formal material announcement. In our view, this could be a sizeable government land deal or even the EPF injecting some of its lucrative assets into MRCB. We believe the key risk for MRCB is the timing of the award of the government land. We understand that various GLC-linked developers have made presentations to the government and approval for the award of land is now at the cabinet level. There are expectations that the award will materialise in June to coincide with the tabling of the 10th Malaysia Plan.

We do not discount the EPF raising the offer beyond RM1.50 per share as it is unlikely that MRCB's share price will drift back to its offer price until the expiry on April 13. At our previous base case target price of RM1.80/share, we estimate that the EPF has to fork out an additional RM209 million to raise its stake by another 8.5% to 50% for the offer to become unconditional. This is by no means a small amount considering it is a pension fund and has certain obligations to its contributors.

Should the takeover materialise, we think the EPF will retain its stake at 50% to avoid triggering the creep-up rule. We provide in this report a scenario analysis on our previous sum-of-part-derived (SOP) target price of RM1.80/share assuming MRCB clinches the various government land that are up for grabs.

This is not an exhaustive list as we understand MRCB is also bidding for other parcels that we are not privy to.

Among the scenarios include an additional 25 acres in KL Sentral, which would raise our SOP value to RM2.20. We think this is a highly probable scenario.

Another scenario involves the additional 3,400 acres of RRIM Land, where with the EPF's involvement, MRCB will likely be appointed the master developer for this whole parcel of land and will receive fee income. Besides this, there are a myriad of possible scenarios in terms of how this large tract of land will be parcelled out and whether MRCB will be joint landowners, contractor or developer.

This will raise our SOP value to RM2.70 per share assuming a development duration of 20 years and pre-tax margins of 15%.

The general perception of MRCB is that it is a high-beta leveraged proxy to the sector with historically very patchy earnings delivery. With three quarters of above average earnings deliverance and three-year earnings per share (EPS) compound annual growth rate (CAGR) of 40%, we think MRCB is transforming itself into a credible GLC-linked property/contractor with its strong KL Sentral franchise and now solid earnings support to boot.

With the EPF's involvement in the RRIM land having exponential spillover effects on MRCB, we are comfortable in raising our target price to RM2.25 per share based on our revised SOP value. - HwangDBS Vickers Research, April 5


This article appeared in The Edge Financial Daily, April 6, 2010.

TENAGA - Price Target News

Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: AMMB

Kenanga has maintained a "trading buy" recommendation on Tenaga Bhd, given limited downside as demand is strengthening whilst coal cost appears to be within the coal compensated price.

"However, a formal fuel-pass-through (FPT) tariff formula is still required to strengthen fundamentals and re-rate TNB convincingly," the research house said.

Foreign shareholding is still very low at 8.6 per cent at 28/2/10, Kenanga noted.

Meanwhile, AmBank reiterated "our BUY call on Tenaga Nasional Bhd (Tenaga) with a higher fair value of RM10.00 a share".
"We expect Tenaga's 2QFY10 results, which will be announced on 29 April 2010, to be stronger than expected due to a sharp rebound in electricity demand growth while coal costs remain under control."

"All-in, given strong demand recovery, there is likelihood that street estimates will be raised over the next two quarters," AmBank said.

"We have raised Tenaga's demand growth to 5 per cent from 4 per cent in FY10F and 6 per cent from 5 per cent in FY11F."

This raised FY10F-FY12F net profit by 5 per cent-8 per cent and our DCF from RM9.90 a share to RM11.10.

" Applying a 10 per cent discount for tariff review uncertainty, our fair value translates to RM10.00 a share," said AmBank.

SIME - Price Target News

Stock Name: SIME
Company Name: SIME DARBY BHD
Research House: OSK

The Teluk Ramunia fabrication yard which Sime Darby Bhd is acquiring from Ramunia Holdings Bhd, will not be a significant contributor to its earnings, OSK Research says.

It said Ramunia's fabrication capacity was estimated at 85,000 tonnes per annum and assuming that its fabrication revenue was able to generate about RM15,000 per tonne, the total revenue contribution expected from this yard at full operational capacity would be about RM1.3 billion.

"Also, if we assume an operating margin of 15 per cent, this would contribute to about RM200 million per annum.

"Having said that, our estimation is only superficial as some higher margin oil and gas products can generate operating margins of 20 to 30 per cent," it said in a research note today.
Sime Darby announced yesterday that all the conditions precedent relating to the sale and purchase agreement for the Teluk Ramunia fabrication yard had beenful filled.

Hence, the sales and purchase agreement is now unconditional and all parties involved will now take the necessary action to complete the acquisition.

OSK said further that its assumption of revenue and operating profit contributions of RM1.3 billion and RM200 million respectively were on the basis of 100 per cent utilisation.

"However, we only expect this yard to achieve utilisation of about 30 per cent in financial year 2011," it said.

The research house said the plantation segment was still the dominant contributor to Sime Darby's earnings, making up 67 per cent of the company's earnings before interest and taxes for the first half of 2010 financial year.

"If we factor in a crude palm oil price of RM2,600 per tonne for the 2010and 2011 calender years, Sime Darby's earnings would be bumped up to RM3.0billion for financial year 2010 and RM3.4 billion for financial year 2011," it added.

OSK rates Sime Darby a "sell" with a target price of RM7.02 a share. -- Bernama

TASEK - Price Target News

Stock Name: TASEK
Company Name: TASEK CORPORATION BHD
Research House: CIMB

Tasek Corp Bhd
(April 5, RM5.35)
Downgrade to neutral at RM5.20, target price raised to RM5.90: Tasek is Malaysia's fourth-largest cement manufacturer with an annual capacity of 2.3 million tonnes each for cement and clinker. The group is also one of the top five ready-mixed concrete producers in Malaysia.

While our recent plant tour left us feeling optimistic about the company's medium-to-long term prospects, earnings could be weak in the near term given lower sales volumes and higher rebates across the industry.

In light of this, we are cutting our FY10 earnings per share (EPS) by 11%. However, our blended target price is raised from RM5.20 to RM5.90 as we revise our target valuations to 13.5 times price/earnings (P/E) from 12 times previously and one times price/book value (P/BV) from 0.8 time previously given the potential improvement in the mid-to long-term prospects.

While we acknowledge that a stronger pick-up in demand is likely to come through in 2H, the rise in demand is coming through slower than expected. Furthermore, there is limited share price upside as buying interest since its 4Q results announcement has pushed Tasek's share price up 33% year to date, better than the market's 5% gain.

Given the lack of short-term catalysts due to weak demand and high rebates, we downgrade the stock from outperform to neutral. For better exposure to pump-priming, we prefer direct exposure to the contractors.

The growth prospects for the construction sector and the fundamentals for the building materials sector remain positive for 2010 and beyond. We project growth of 4.6% for the construction sector in 2010 and 5.6% in 2011. Demand for building materials should rise in tandem.

Tasek is hoping that demand for cement picks up about 5% this year, led by stronger growth in the second half. This should enable it to scale back its rebates, leading to further upside to earnings and margins.

When it announced its 4Q results in February, Tasek proposed a dividend and capital repayment. Although it will involve an amount of about 29% of its end-FY09 cash pile of RM356 million, Tasek expects its cash position to stay strong given the RM80 million free cash flow generated each year.

We believe that the cash could be used for further downstream expansion into precast concrete or upstream expansion. - CIMB Research, April 5


This article appeared in The Edge Financial Daily, April 6, 2010.

UMW - Price Target News

Stock Name: UMW
Company Name: UMW HOLDINGS BHD
Research House: AFFIN

UMW is Affin's top pick in the automotive sector as Affin believes earnings may surprise on the upside given UMW's aggressive O&G expansion, bright prospects and management prowess.

Affin rates UMW an "add" with a target price of RM7 a share.

Affin also lists key re-rating catalysts for the stock:

(1) product pipeline visibility for 51 per cent-owned UMW Toyota Motor Sdn Bhd:
(2) potential listing of the Group's O&G unit; and

(3) active capital management.

"Initial overhanging fear, at least on our part, of sharp decline in domestic Toyota car sales given the massive global Toyota car recalls have been proven unfounded," Affin said.

POS - Price Target News

Stock Name: POS
Company Name: POS MALAYSIA BHD
Research House: INTER PACIFIC

Pos Malaysia Bhd
(April 5, RM2.93)
Maintain neutral at RM2.78, target price of RM2.12: Following the announcement that Khazanah Nasional Bhd will divest its 32% stake in Pos Malaysia Bhd on March 30, when the New Economic Model (NEM) was unveiled, we found Pos Malaysia's daily volume of shared traded had swelled, averaging 7.78 million between March 30 and April 2. In tandem, its share price gained by 35% or up 72 sen to close at RM2.78 last Friday.

Prior to the announcement, Pos Malaysia's one-year average price was RM2.22, with a high of RM2.54.

With its 35% gain from March 30 to April 2 to RM2.78 following the announcement of Khazanah's intention to divest, its share price has surpassed our target price of RM2.12 by 31.1% and consensus target price of RM2.25 by 24.4%. Also, it outperformed the FBM KLCI, which gained only 1.2% during the period to close at 1,335.9 points.

Details of the divestment plan have not been unveiled.

With the price having moved significantly and no clear details on the divestment plan, we think the potential upside could be limited from the current news, which implies that there is great room for investors to take profit.

We forecast Pos Malaysia's revenue and net profit for FY10 to come in at RM940 million and RM75.3 million respectively. - Inter-Pacific Research, April 5


This article appeared in The Edge Financial Daily, April 6, 2010.

TRC - Price Target News

Stock Name: TRC
Company Name: TRC SYNERGY BHD
Research House: HWANGDBS

Malaysian Resources Corp Bhd (MRCB)
(April 5, RM1.69)
Maintain buy at RM1.68, with a higher target price of RM2.25: Our view that minority shareholders should shun the conditional takeover offer at RM1.50 per share by the Employees Provident Fund (EPF) has turned out to be correct with MRCB's share price having overtaken the offer price.

Our reasoning was simple in that something was brewing when the majority shareholder sees more value in the stock by launching a GO (general offer) exercise.

The recent announcement by the prime minister that the EPF and the government will form a joint venture to develop the 3,400 acres (1,376ha) of RRIM land in Sungai Buloh has derailed the EPF's conditional takeover exercise. This is because MRCB's share price is clearly above RM1.50/share on expectations that MRCB will be formally appointed as the master developer of this land.

Nonetheless, we read the EPF's market moves as it being serious in seeing this conditional takeover materialise and it solidifying its shareholding prior to a formal material announcement. In our view, this could be a sizeable government land deal or even the EPF injecting some of its lucrative assets into MRCB. We believe the key risk for MRCB is the timing of the award of the government land. We understand that various GLC-linked developers have made presentations to the government and approval for the award of land is now at the cabinet level. There are expectations that the award will materialise in June to coincide with the tabling of the 10th Malaysia Plan.

We do not discount the EPF raising the offer beyond RM1.50 per share as it is unlikely that MRCB's share price will drift back to its offer price until the expiry on April 13. At our previous base case target price of RM1.80/share, we estimate that the EPF has to fork out an additional RM209 million to raise its stake by another 8.5% to 50% for the offer to become unconditional. This is by no means a small amount considering it is a pension fund and has certain obligations to its contributors.

Should the takeover materialise, we think the EPF will retain its stake at 50% to avoid triggering the creep-up rule. We provide in this report a scenario analysis on our previous sum-of-part-derived (SOP) target price of RM1.80/share assuming MRCB clinches the various government land that are up for grabs.

This is not an exhaustive list as we understand MRCB is also bidding for other parcels that we are not privy to.

Among the scenarios include an additional 25 acres in KL Sentral, which would raise our SOP value to RM2.20. We think this is a highly probable scenario.

Another scenario involves the additional 3,400 acres of RRIM Land, where with the EPF's involvement, MRCB will likely be appointed the master developer for this whole parcel of land and will receive fee income. Besides this, there are a myriad of possible scenarios in terms of how this large tract of land will be parcelled out and whether MRCB will be joint landowners, contractor or developer.

This will raise our SOP value to RM2.70 per share assuming a development duration of 20 years and pre-tax margins of 15%.

The general perception of MRCB is that it is a high-beta leveraged proxy to the sector with historically very patchy earnings delivery. With three quarters of above average earnings deliverance and three-year earnings per share (EPS) compound annual growth rate (CAGR) of 40%, we think MRCB is transforming itself into a credible GLC-linked property/contractor with its strong KL Sentral franchise and now solid earnings support to boot.

With the EPF's involvement in the RRIM land having exponential spillover effects on MRCB, we are comfortable in raising our target price to RM2.25 per share based on our revised SOP value. - HwangDBS Vickers Research, April 5


This article appeared in The Edge Financial Daily, April 6, 2010.

KINSTEL - Price Target News

Stock Name: KINSTEL
Company Name: KINSTEEL BHD
Research House: MAYBANK

KUALA LUMPUR: Maybank Investment Bank Equity Research (Maybank IB) has upgraded KINSTEEL BHD [] to BUY from HOLD at RM1.03, with a higher target price of RM1.23 -- compared to the previous target of RM1.03 -- after raising its earnings forecasts, and placing a higher eight times 2011 PER target on optimism for near-term margin growth. The research house said it had turned positive on Kinsteel as its Apr-May '10 billet deliveries have been sold forward at US$550 per tonne (versus US$600 per tonne currently), while reflecting the inflated iron ore costs. "Its current iron ore inventory, sufficient till June 2010, was procured at an average price of US$110 per tonne (versus 2Q10 quarterly contract of US$200 per tonne). "The resulting margin expansion will be more than sufficient to compensate for a potential gas price hike," it said. Maybank IB said with a three-month iron ore inventory in hand, Kinsteel would not commit to the 2Q10 iron ore contract (90% above 2009 annual benchmark of USD90 per month for iron ore pellet). Management may consider sourcing iron ore from domestic reserves in nearby Pahang, Terengganu and Kelantan, which could have more favourable pricing. The research house said that Kinsteel shares offered a better risk-reward ratio now, given higher steel prices, positive global steel fundamentals, and low foreign shareholding of less than 10%, compared to 25% in 3Q08. "We raised our 2010 EPS by 13% while that of 2011 is largely unchanged, reflecting latest steel prices and iron ore input costs. "This upgrade brings our forecast to the top-range of broker estimates. Our new target price is RM1.23 (+19%), applying 8 times PER to 2011 fully-diluted EPS (6 times previously), in line with our target for Ann Joo," it said.

MRCB - Price Target News

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP
Research House: HWANGDBS

Malaysian Resources Corp Bhd (MRCB)
(April 5, RM1.69)
Maintain buy at RM1.68, with a higher target price of RM2.25: Our view that minority shareholders should shun the conditional takeover offer at RM1.50 per share by the Employees Provident Fund (EPF) has turned out to be correct with MRCB's share price having overtaken the offer price.

Our reasoning was simple in that something was brewing when the majority shareholder sees more value in the stock by launching a GO (general offer) exercise.

The recent announcement by the prime minister that the EPF and the government will form a joint venture to develop the 3,400 acres (1,376ha) of RRIM land in Sungai Buloh has derailed the EPF's conditional takeover exercise. This is because MRCB's share price is clearly above RM1.50/share on expectations that MRCB will be formally appointed as the master developer of this land.

Nonetheless, we read the EPF's market moves as it being serious in seeing this conditional takeover materialise and it solidifying its shareholding prior to a formal material announcement. In our view, this could be a sizeable government land deal or even the EPF injecting some of its lucrative assets into MRCB. We believe the key risk for MRCB is the timing of the award of the government land. We understand that various GLC-linked developers have made presentations to the government and approval for the award of land is now at the cabinet level. There are expectations that the award will materialise in June to coincide with the tabling of the 10th Malaysia Plan.

We do not discount the EPF raising the offer beyond RM1.50 per share as it is unlikely that MRCB's share price will drift back to its offer price until the expiry on April 13. At our previous base case target price of RM1.80/share, we estimate that the EPF has to fork out an additional RM209 million to raise its stake by another 8.5% to 50% for the offer to become unconditional. This is by no means a small amount considering it is a pension fund and has certain obligations to its contributors.

Should the takeover materialise, we think the EPF will retain its stake at 50% to avoid triggering the creep-up rule. We provide in this report a scenario analysis on our previous sum-of-part-derived (SOP) target price of RM1.80/share assuming MRCB clinches the various government land that are up for grabs.

This is not an exhaustive list as we understand MRCB is also bidding for other parcels that we are not privy to.

Among the scenarios include an additional 25 acres in KL Sentral, which would raise our SOP value to RM2.20. We think this is a highly probable scenario.

Another scenario involves the additional 3,400 acres of RRIM Land, where with the EPF's involvement, MRCB will likely be appointed the master developer for this whole parcel of land and will receive fee income. Besides this, there are a myriad of possible scenarios in terms of how this large tract of land will be parcelled out and whether MRCB will be joint landowners, contractor or developer.

This will raise our SOP value to RM2.70 per share assuming a development duration of 20 years and pre-tax margins of 15%.

The general perception of MRCB is that it is a high-beta leveraged proxy to the sector with historically very patchy earnings delivery. With three quarters of above average earnings deliverance and three-year earnings per share (EPS) compound annual growth rate (CAGR) of 40%, we think MRCB is transforming itself into a credible GLC-linked property/contractor with its strong KL Sentral franchise and now solid earnings support to boot.

With the EPF's involvement in the RRIM land having exponential spillover effects on MRCB, we are comfortable in raising our target price to RM2.25 per share based on our revised SOP value. - HwangDBS Vickers Research, April 5


This article appeared in The Edge Financial Daily, April 6, 2010.

TANJONG - Price Target News

Stock Name: TANJONG
Company Name: TANJONG PUBLIC LIMITED COMPANY
Research House: MAYBANK

Maybank has given Tanjong a "buy" recommendation with a target price of RM19.10 a share.

The investment bank says Tanjong sees plenty of potential for the power division, especially in the Middle East and North Africa.

Tanjong aims to double its current 3,951MW of installed capacity over the next five years.

"However, this will not be at the expense of returns. Shareholder value is still its paramount concern," Maybank adds.

WASEONG - Price Target News

Stock Name: WASEONG
Company Name: WAH SEONG CORPORATION BHD
Research House: AMMB

Wah Seong Corp Bhd
(April 2, RM2.69)
Reiterate buy at RM2.62 with fair value of RM3.40: Wah Seong's wholly-owned Gas Services International Ltd (GSI) has reached a settlement with Weatherford UK Ltd. Weatherford had claimed damages as a result of GSI's failure to deliver 28 booster compressors in time for testing and commissioning, comply with relevant standards, specification and fitness for purpose and commissioning/onsite support obligations.

Weatherford had claimed €2.4 million (RM11million) plus additional damages for the breach, which were to be offset against any amount owing to GSI, which had also filed a counter claim. In the settlement, Weatherford agreed to pay US$2 million (RM6.5million) to GSI.

We understand that Wah Seong had made some provisions for Weatherford's claims in the past quarters. But we are uncertain at this stage on the quantum of writeback of provisions arising from this settlement.

Assuming full writeback of the full US$2 million, we estimate that FY10 net profit could be raised slightly by 5% under a best-case scenario.

For now, we maintain our FY10F-FY12 estimates, which project an average earnings growth of 8%.

This is conservative compared to management's organic annual earnings growth target of 15% over the next five years.

Wah Seong's tender book of RM5.3 billion appears huge but most awards for the tenders are likely to be announced towards year-end. As such, there is a likelihood that Wah Seong's order book of RM1.4 billion currently could slide towards RM1 billion by 2QFY10, but rebound towards year-end as new orders materialise.

Wah Seong is still in advanced negotiations with Italy-based Orleans Group to buy a stake - around 60%-70% - in a former Socotherm pipe-coating facility in Port Harcourt, Nigeria.

But to mitigate the huge risks in Nigeria, Wah Seong is looking at a technical arrangement with the Orleans Group to provide pipe-coating consultancy services first but with an option to later buy an equity stake if the operation kicks off successfully.

The stock trades at an attractive CY10 diluted price earnings (PE) of 14 times, above Malaysia's oil and gas (O&G) sector of 12 times but below its five-year average of 16 times and peak of over 25 times.

We reiterate our buy call on Wah Seong with unchanged fair value of RM3.40 per share, pegged to FY10's PE of 18 times at parity to the stock's four-year average.

We still like the group for its proven expertise in pipe-coating, growing regional presence in the O&G industry and merger and acquisition excitement. - AmResearch, April 2


This article appeared in The Edge Financial Daily, April 5, 2010.

EONCAP - Price Target News

Stock Name: EONCAP
Company Name: EON CAPITAL BHD
Research House: MAYBANK

EON Capital Bhd (EONCap)
(April 2, RM7.13)
Maintain hold at RM7.05 with target price of RM7.20: Hong Leong Bank Bhd's (HLBB) revised offer values EONCap at 1.42 times book based on RM5.13 book value of equity per share as at December 2009; still at the lower end of recent banking mergers and acquisitions (M&A).

HLBB's terms are also very restrictive in terms of deadline, to avoid having to comply with the new guidelines on asset disposal.

We expect EONCap's new board of directors to agree with a shareholders' EGM. The sale is almost a foregone conclusion as it requires only 50%-plus-one-share vote. Minorities will have little say.

Last Thursday, HLBB revised its offer to buy the entire assets and liabilities of EONCap for RM5.06 billion cash or at RM7.30 per share. This is a mere 2.8% above the revived offer of RM4.92 billion or RM7.10 per share made on March 30, where the offer price was unchanged from the original offer made on Jan 21. The revised offer price is also a mere 3.5% premium over EONCap's last Thursday's closing share price.

The offer price is subject to a due diligence on EONCap. EONCap's board of directors has until today to confirm with HLBB that it agrees to submit its application for authorities' approval on or before April 19, and issue a notice of shareholders' EGM on or before April 30, and for the EGM be held not later than 14 days from despatch date of the notice. Also, the completion date for the exercise is not later than May 31. There are other conditions, amongst which EONCap must not entertain, pursue or negotiate with any other parties on similar subject matter and HLBB can withdraw its offer if there is a new guideline or law which affects its offer.

With a completion deadline set for May 31, it is obvious that the speed is to avoid the exercise having to fall within the ambit of the Securities Commission's new guidelines on asset disposal which are up for public comments by April 9, and which may be effective as early as June.

The revised offer price still values EONCap at the lower end of recent domestic banking M&A which averaged 1.7 times their historical book values.

We think that the new offer price is still low considering that it is for the business in entirety. The deal requires only the go ahead of shareholders who hold 50%+one share of EONCap, and will go through if Tan Sri Tiong Hiew King (17.1%), Rin Kei Mei (15.5%), Employee Provident Fund (12%) and Khazanah Nasional Bhd (10%), who hold a total 54.6% agree to sell.

We expect EONCap's new board to accept HLBB's terms. - Maybank IB, April 2


This article appeared in The Edge Financial Daily, April 5, 2010.

TCHONG - Price Target News

Stock Name: TCHONG
Company Name: TAN CHONG MOTOR HOLDINGS BHD
Research House: OSK

Tan Chong Motor Holdings Bhd (TCM)
(April 2, RM3.89)
Maintain buy at RM3.77, target price raised to RM4.51: News of TCM securing an exclusive distributorship in Laos is taking the group closer to establishing a regional presence.

TCM announced on Bursa that it has entered into a distribution agreement with Nissan Motor Co Ltd for the sole and exclusive rights to distribute Nissan's completely built-up vehicles in Laos. TCM will spend US$5 million (about RM16 million) over the next five years to set up showrooms and as working capital.

The distribution of vehicles will commence beginning 2Q10, with initial sales of 200 units a year.

TCM's Laos foray comes on the heels of earlier news of the group securing exclusive distributorship rights in Cambodia and a certificate of investment to set up a manufacturing plant in Vietnam. With these three Indochinese countries in the picture, it's a matter of time that its Vietnam plant will play a key role as TCM's second assembly plant catering to these three countries.

The automotive industry in Laos is undeveloped, with vehicles sales (mostly reconditioned trucks not road worthy in developed countries) growing by double digits over the past few years. Most of the roads in Laos are in very poor condition, which makes driving safer only during the day, and are prone to seasonal flooding during the months of August up to November.

The demand for vehicles is largely met by the import of used reconditioned models and the secondary car market, which accounts for more than 90% of total industry volume. Of the total circa 700,000 vehicles on the road, 80% are motorcycles, with the remainder mostly comprising of pick-ups and light trucks.

We are positive on this development given the relatively untapped Laos market, where new vehicles sales is likely to be encouraging as the country's auto industry develops. This leads us to upgrade our FY10-FY12 earnings forecast by 1%-1.8% on the back of higher vehicle sales.

Hence, our target price is raised from RM4.26 to RM4.51 as we roll our 12-month earnings forward. With Indonesia left to go, we expect more excitement ahead as TCM's regional plans unfold.

Given our new volume assumption (from the increase in unit sales from Laos) of 34,408 units for 2010 and 35,537 and 50,572 units in 2011/2012, this raises our revenue estimates by 0.6%-0.9% (RM20.9 million-RM35.2 million) over the next three years. Effectively, our bottom line for FY10-FY12 also edges up some 1%-1.8% (RM2.2 million-RM5.9 million).

Hence, we are upgrading our target price to RM4.51, with our buy call maintained. We continue to like TCM for its regional transformation going forward.

TCM may see increasing earnings momentum given that the ringgit has been strengthening against the Japanese yen in the past one week. Our sensitivity analysis suggests that a 10-sen deprecation or appreciation in our yen/ringgit assumption (at RM3.50 for every ¥100 in FY10 and RM3.27 in FY11) would respectively shave off or increase some RM14.8 million-RM18 million from TCM's net profit, or 7% on average over a two-year horizon. - OSK Research, April 2


This article appeared in The Edge Financial Daily, April 5, 2010.

TASEK - Price Target News

Stock Name: TASEK
Company Name: TASEK CORPORATION BHD
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research has downgraded Tasek Corp from Outperform to Neutral due to the lack of short-term catalysts due to weak demand and high rebates.

It said on Monday, April 5 its recent plant tour left it feeling optimistic about Tasek's medium- to-long term prospects. However, earnings could be weak in the near term given lower sales volumes and higher rebates across the industry.

"In light of this, we are cutting our FY10 EPS by 11%. However, our blended target price is raised from RM5.20 to RM5.90 as we revise our target valuations to 13.5x P/E (12x previously) and 1.0x P/BV (0.8x previously) given the potential improvement in the mid- to long-term prospects," it said.

CIMB Research said while it acknowledges that a stronger pick-up in demand is likely to come through in 2H, the rise in demand is coming through more slowly than expected.

It added furthermore, there is limited share price upside given the buying interest seen since its 4Q results announcement. Given the lack of short-term catalysts due to weak demand and high rebates, we downgrade the stock from Outperform to Neutral.

AIRPORT - Price Target News

Stock Name: AIRPORT
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Research House: OSK

Malaysia Airports Holdings Bhd (MAHB)
(April 2, RM4.95)
Maintain trading buy at RM4.80 with target price of RM5.50: MAHB has launched "Runway To Success: Building A World-Class Airport Business 2010-2014".

We are generally pleased with the five-year business direction placing aeronautical revenue as the backbone supported by a conservative traffic growth of 4.1%, its aim to nurture its retail business, expanding its horizon to strategic land development and boosting its overseas earnings five years from now.

The key target is to achieve earnings before interest, tax, depreciation and amortisation (Ebitda) of RM822 million on a base-case scenario and RM1.12 billion on an optimistic case for FY14.

Being an airport operator, air traffic growth remains MAHB's underlying fundamental. The company has estimated a base growth rate of 4.1% compound annual growth return (CAGR) from 2008 to 2014, which may offer some upside given the robust growth in the low-cost carrier segment and other Asian markets.

Nevertheless, as its earnings projection incorporates a potential increase in passenger service charges in 2014 as well as 30% increase in landing charges plus other aeronautical charges in May 2011, we may see some road blocks covered by the marginal cost support agreed to by the government under the operating agreement.

MAHB has big plans to raise its non-aeronautical contribution to 67.1% by 2014, or by an absolute revenue of RM2.1 billion, from RM860.6 million.

Going forward, the company has established clear plans to grow the retail business by introducing the right products at the right locations.

MAHB has identified 2,730 acres (1,105ha) of land surrounding the KLIA for development. While the management has guided for rental on the high side and has a bullish revenue projection of RM112 million by FY14, we are upbeat on its potential, given its previous success in developing Malaysia International Aerospace Centre at Subang Airport.

The company has also been building its name in airport management overseas, having three such ventures under its belt. It is also bidding for two airport management jobs in Asia, and hopes to secure these by year-end. However, these investments will bear fruit only after a five-year gestation period.

We maintain our trading buy recommendation with a target price of RM5.50 based on 16 times FY10 earnings per share. - OSK Research, April 2


This article appeared in The Edge Financial Daily, April 5, 2010.

MRCB - Price Target News

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP
Research House: HWANGDBS

KUALA LUMPUR: Hwang DBS Vickers Research has raised its target price for MALAYSIAN RESOURCES CORP [] Bhd (MRCB) to RM2.25 adding that the Employees Provident Fund may be forced to make a higher offer if it is serious in bringing its stake to 50%.

It said on Monday, April 5 that it believes the Prime Minister's recent statement on the Government and the EPF forming a JV for the 3,400 acres of Rubber Research Institute Malaysia (RRIM) Land where MRCB will likely be the master developer has thwarted EPF's GO at RM1.50/share.

"We read EPF's market moves (buying shares post ex-rights, subscribing heavily for extra rights shares and bringing its stake to 41.5% post GO) as it being serious in seeing this conditional take over materialize and it solidifying its shareholding prior to a material announcement.

"At a higher offer of RM1.80/share, the additional 8.5% to raise its stake to 50% will cost MRCB RM209m. With financial obligations to its contributors, we assume EPF sees further deep embedded value in MRCB," it said.

Hwang DBS Vickers Research also provided a scenario analysis on it clinching different land deals which are all mutually exclusive.

In all scenarios, it assumed there is 50:50 sharing with EPF. The most accretive deal, in its view, is the 3,400 RRIM land in Sungei Buloh given its sheer size, potential pricing power and also expectations of a LRT station.

In Scenario 4 (RRIM), the research house assumes MRCB clinches just one-sixth of the development portion with a 50% stake, a plot ratio of just 3x and ASP of RM300 psf will translate into a total GDV of RM17bn and raise our SOP value by 50% to RM2.70/share.

"We estimate break even at RM243 psf based on land cost of RM10 psf and CONSTRUCTION [] costs of RM180 psf. Another likely deal, is the additional 20-30 acres of land in KL Sentral," it said

"We raise our PT to RM2.25/share assuming a 50% probability from Scenario 4 which has yet to take into account any fee income or construction work from its master developer status. Even if a higher offer doesn't materialise, MRCB is transforming into a credible GLC-linked contractor/developer with strong earnings support - 3-year EPS CAGR of 40% anchored by higher progress billings at KL Sentral and external orderbook of RM1.5bn. Reiterate BUY," it said.

DIGI - Price Target News

Stock Name: DIGI
Company Name: DIGI.COM BHD
Research House: MAYBANK

DiGi.com Bhd
(April 1, RM22.70)
Maintain hold at RM22.58 with target price of RM23.20: With its initial toehold snugly expanded into a meaningful foothold over the last five years, DiGi is now well-prepared for the next great sprint of a marathon to be a key wireless Internet and data provider.

Our RM23.20 discounted cash flow-based (DCF) target price is based on a weighted average cost of capital (WACC) of 8.3%, risk-free rate of 4%, beta of 0.7 and terminal growth rate of 2.4%.

DiGi's remarkable transformation in the 2005-2009 period when its revenue market share rose from 16 percentage points (ppts) to 26ppts, put into perspective how it is now a meaningful and sustainable third-placed telco.

Despite the many challenges of transition and competition in 2009, DiGi is now well-entrenched to reap a sustainable if not growing share of future mobile revenues.

With its 14.4Mbps High-Speed Packet Access (HSPA) network launched, DiGi can finally offer the full suite of mobile voice and data services that its competitors had a year's head start on.

Smartphones such as the BlackBerry and iPhone are now on offer, whilst capacity and coverage are now in place for DiGi to start competing effectively in the burgeoning non-voice and value-added segments.

Braced for potentially single-digit revenue growth in voice revenues, DiGi is focused on growing future mobile data revenues significantly. Although DiGi is prepared for continued price pressures in mobile Internet, it can be expected to rely on its operational efficiency to ensure generally neutral earnings before interest, tax, depreciation and amortisation (Ebitda) margins.

DiGi quoted various independent sources expecting the mobile broadband market to be worth RM3 billion to RM4 billion by 2013. DiGi's Internet revenue contribution though not likely to be significant in 2010, could be so in 2011.

There are already over 500,000 mobile Internet users at end-4Q09 of whom about 10% are on wireless broadband.

With recent discussions on spectrum refarming, DiGi is potentially a key beneficiary. DiGi has been a relatively efficient user of the limited spectrum available and therefore would seem to be a sensible choice for the award of more spectrum.

This could drive penetration and usage further, but may not happen in the immediate forecast 2010-2012 period.

The recent announcement of RM1 billion in Universal Service Provision funds allocated for the building of various community-focused broadband initiatives is generally positive for the industry.

Aiming for above-industry average growth. DiGi hopes to achieve a better than 5%-6% revenue growth in 2010, assuming gross domestic product growth influences revenue growth the most. Whilst this may be challenging, investors are likely to be pacified by its continued commitment to further active capital management. - Maybank IB, April 1


This article appeared in The Edge Financial Daily, April 2, 2010.

WCT - Price Target News

Stock Name: WCT
Company Name: WCT BHD
Research House: OSK

KUALA LUMPUR: OSK Research is retaining its OVERWEIGHT rating on Malaysian contractors driven by expectations of more positive news flow. Its top picks are Mudajaya (BUY, TP: RM6.48) for its strong earnings growth and WCT (BUY, TP: RM3.08), as it believes more contracts are in the pipeline. It also likes Naim (BUY, TP: RM4.21) for thematic Sarawak play but downgrade Hock Seng Lee (NEUTRAL, TP: RM1.50), owing to the recent run-up in its share price. OSK Research said on Friday, April 2 that over the 1Q10 period, about RM2.85 billion worth of jobs was awarded. Domestic contracts showed a healthy 16% y-o-y increase but contracted by 38% q-o-q due to the high base effect. "We believe the domestic contract flow will exceed last year's RM9.86 billion, with better numbers showing up in the upcoming quarters," it said. It said during the 1Q10 period, of the RM2.85 billion worth of jobs was awarded, 65.2% was domestic based and 34.8% foreign. The average size per domestic job stood at RM169 million, in line with one of its key sector themes for 2010 that jobs flow will be centred on the mid-small sized ones. OSK Research said contract awards in Sarawak appear to be gaining traction, with Hock Seng Lee (NEUTRAL, TP: RM1.50, Downgrade, given the share price run-up) and Naim (BUY, TP: RM4.21) collectively bagging RM245 million worth of jobs. For the more "popular" jobs, Gadang (NR) secured the LCCT EW2 (RM291m) while IJM (NEUTRAL, TP: RM4.70) was finally awarded the RM600m Besraya extension after almost a year. "Market talk is that the UEM-Bina Puri JV and privately held AHT Norlan-Carriage JV are the finalists for the LCCT terminal building (RM750 million to RM850 million) and satellite tower (RM400 million to RM500 million). Shortlisted contractors that did not make it were Sunway (NR), IJM and Gadang. The Government is also evaluating the proposal for a RM5-6bn highway parallel to the existing NSE connecting Banting (Selangor) and Taiping (Perak), which could eventually be extended all the way to Gelang Patah in Johor. "We think the proposal makes little economic sense as the current NSE is not fully utilised (festive seasons excluded). Furthermore, the completion of the Double Track at end-2013 would already provide an alternative route, especially for cargo flow," said OSK Research. In East Malaysia, there are plans to construct an 11km bridge linking Sabah and Labuan, which could cost RM3 billion (RM6 billion if delayed). "We are sceptical on the feasibility of this project as Labuan's population is a mere 90, 000," it said. Recently, the 60:40 JV between Loh&Loh (NR) and Sinohydro received the LOI for the Hulu Terengganu Dam (RM828 million). The other finalist for the job was Gamuda (NEUTRAL, TP: RM2.75).

MUDAJYA - Price Target News

Stock Name: MUDAJYA
Company Name: MUDAJAYA GROUP BHD
Research House: OSK

KUALA LUMPUR: OSK Research is retaining its OVERWEIGHT rating on Malaysian contractors driven by expectations of more positive news flow. Its top picks are Mudajaya (BUY, TP: RM6.48) for its strong earnings growth and WCT (BUY, TP: RM3.08), as it believes more contracts are in the pipeline. It also likes Naim (BUY, TP: RM4.21) for thematic Sarawak play but downgrade Hock Seng Lee (NEUTRAL, TP: RM1.50), owing to the recent run-up in its share price. OSK Research said on Friday, April 2 that over the 1Q10 period, about RM2.85 billion worth of jobs was awarded. Domestic contracts showed a healthy 16% y-o-y increase but contracted by 38% q-o-q due to the high base effect. "We believe the domestic contract flow will exceed last year's RM9.86 billion, with better numbers showing up in the upcoming quarters," it said. It said during the 1Q10 period, of the RM2.85 billion worth of jobs was awarded, 65.2% was domestic based and 34.8% foreign. The average size per domestic job stood at RM169 million, in line with one of its key sector themes for 2010 that jobs flow will be centred on the mid-small sized ones. OSK Research said contract awards in Sarawak appear to be gaining traction, with Hock Seng Lee (NEUTRAL, TP: RM1.50, Downgrade, given the share price run-up) and Naim (BUY, TP: RM4.21) collectively bagging RM245 million worth of jobs. For the more "popular" jobs, Gadang (NR) secured the LCCT EW2 (RM291m) while IJM (NEUTRAL, TP: RM4.70) was finally awarded the RM600m Besraya extension after almost a year. "Market talk is that the UEM-Bina Puri JV and privately held AHT Norlan-Carriage JV are the finalists for the LCCT terminal building (RM750 million to RM850 million) and satellite tower (RM400 million to RM500 million). Shortlisted contractors that did not make it were Sunway (NR), IJM and Gadang. The Government is also evaluating the proposal for a RM5-6bn highway parallel to the existing NSE connecting Banting (Selangor) and Taiping (Perak), which could eventually be extended all the way to Gelang Patah in Johor. "We think the proposal makes little economic sense as the current NSE is not fully utilised (festive seasons excluded). Furthermore, the completion of the Double Track at end-2013 would already provide an alternative route, especially for cargo flow," said OSK Research. In East Malaysia, there are plans to construct an 11km bridge linking Sabah and Labuan, which could cost RM3 billion (RM6 billion if delayed). "We are sceptical on the feasibility of this project as Labuan's population is a mere 90, 000," it said. Recently, the 60:40 JV between Loh&Loh (NR) and Sinohydro received the LOI for the Hulu Terengganu Dam (RM828 million). The other finalist for the job was Gamuda (NEUTRAL, TP: RM2.75).

GAMUDA - Price Target News

Stock Name: GAMUDA
Company Name: GAMUDA BHD
Research House: OSK

KUALA LUMPUR: OSK Research is retaining its OVERWEIGHT rating on Malaysian contractors driven by expectations of more positive news flow. Its top picks are Mudajaya (BUY, TP: RM6.48) for its strong earnings growth and WCT (BUY, TP: RM3.08), as it believes more contracts are in the pipeline. It also likes Naim (BUY, TP: RM4.21) for thematic Sarawak play but downgrade Hock Seng Lee (NEUTRAL, TP: RM1.50), owing to the recent run-up in its share price. OSK Research said on Friday, April 2 that over the 1Q10 period, about RM2.85 billion worth of jobs was awarded. Domestic contracts showed a healthy 16% y-o-y increase but contracted by 38% q-o-q due to the high base effect. "We believe the domestic contract flow will exceed last year's RM9.86 billion, with better numbers showing up in the upcoming quarters," it said. It said during the 1Q10 period, of the RM2.85 billion worth of jobs was awarded, 65.2% was domestic based and 34.8% foreign. The average size per domestic job stood at RM169 million, in line with one of its key sector themes for 2010 that jobs flow will be centred on the mid-small sized ones. OSK Research said contract awards in Sarawak appear to be gaining traction, with Hock Seng Lee (NEUTRAL, TP: RM1.50, Downgrade, given the share price run-up) and Naim (BUY, TP: RM4.21) collectively bagging RM245 million worth of jobs. For the more "popular" jobs, Gadang (NR) secured the LCCT EW2 (RM291m) while IJM (NEUTRAL, TP: RM4.70) was finally awarded the RM600m Besraya extension after almost a year. "Market talk is that the UEM-Bina Puri JV and privately held AHT Norlan-Carriage JV are the finalists for the LCCT terminal building (RM750 million to RM850 million) and satellite tower (RM400 million to RM500 million). Shortlisted contractors that did not make it were Sunway (NR), IJM and Gadang. The Government is also evaluating the proposal for a RM5-6bn highway parallel to the existing NSE connecting Banting (Selangor) and Taiping (Perak), which could eventually be extended all the way to Gelang Patah in Johor. "We think the proposal makes little economic sense as the current NSE is not fully utilised (festive seasons excluded). Furthermore, the completion of the Double Track at end-2013 would already provide an alternative route, especially for cargo flow," said OSK Research. In East Malaysia, there are plans to construct an 11km bridge linking Sabah and Labuan, which could cost RM3 billion (RM6 billion if delayed). "We are sceptical on the feasibility of this project as Labuan's population is a mere 90, 000," it said. Recently, the 60:40 JV between Loh&Loh (NR) and Sinohydro received the LOI for the Hulu Terengganu Dam (RM828 million). The other finalist for the job was Gamuda (NEUTRAL, TP: RM2.75).

PETGAS - Price Target News

Stock Name: PETGAS
Company Name: PETRONAS GAS BHD
Research House: OSK

Petronas Gas Bhd
(April 1, RM9.85)
Maintain buy at RM9.80 with target price raised to RM13.81: Our contrarian view was proven correct as Petronas Gas announced better conditions for the last term of its Gas Processing and Transmission Agreement (GPTA). Fixed revenue will be lower but this will be offset by higher variable revenue linked to the volume of gas processed and transported.

The terms now call for a clear demarcation between processing and transportation fees. While the fixed portion of processing fees is down by 40% due to new transportation fees, the variable volume related portion of fees is up four-fold. The net effect is that revenues are forecast to drop by only 1% under the new terms.

While revenue may be largely unchanged, Petronas Gas' costs will come down significantly as the company will no longer need to pay for the amount of gas it consumes as part of the processing business as long as the consumption level is within agreed operating parameters.

In fact, it may even earn an incentive if it can bring down the amount of gas consumed to a certain level. We believe Petronas Gas will be able to avoid paying for its gas but has not built in any incentives. Earnings before interest, tax, depreciation and amortisation (Ebitda) is therefore forecast to rise by 23% under the new terms.

As we maintain our other forecasts, including volume processed and associates income, Petronas Gas' bottom line will get a 35% boost in FY11 and 38% for FY12. This raises our discounted cash flow-based (DCF) fair value to RM13.81. We also maintain our dividend payout ratio while our dividend per share (DPS) forecast is raised to 65 sen, or a 6.6% yield in FY11.

With the gas cost element removed, Petronas Gas is no longer exposed to rising gas costs as subsidies are removed. The increase in variable volume related revenue also ties the company's revenue closer to performance where we see more upside if Petronas Gas can deliver.

We see no risk of a derating due to the upcoming listing of large Petronas subsidiaries but instead view Petronas Gas as a solid dividend play boosted by the new and more favourable GPTA.

Given the big jump in net profit forecast, our DCF-based fair value is raised from RM10.99 to RM13.81, thus giving an upside of 26%, which means Petronas Gas is a definite buy.

Other than the raised dividend yield forecast of 6.6% for FY11, the company now faces lower risk of hikes in its gas prices as subsidies are withdrawn.

There will of course always be detractors who can point out that the new favourable terms will only last until 2015 but we believe that by then, Petronas Gas will have expanded its business model into power generation and other utilities while still maintaining its role in gas transportation. - OSK Research, April 1


This article appeared in The Edge Financial Daily, April 2, 2010.

HSL - Price Target News

Stock Name: HSL
Company Name: HOCK SENG LEE BHD
Research House: OSK

KUALA LUMPUR: OSK Research is retaining its OVERWEIGHT rating on Malaysian contractors driven by expectations of more positive news flow. Its top picks are Mudajaya (BUY, TP: RM6.48) for its strong earnings growth and WCT (BUY, TP: RM3.08), as it believes more contracts are in the pipeline. It also likes Naim (BUY, TP: RM4.21) for thematic Sarawak play but downgrade Hock Seng Lee (NEUTRAL, TP: RM1.50), owing to the recent run-up in its share price. OSK Research said on Friday, April 2 that over the 1Q10 period, about RM2.85 billion worth of jobs was awarded. Domestic contracts showed a healthy 16% y-o-y increase but contracted by 38% q-o-q due to the high base effect. "We believe the domestic contract flow will exceed last year's RM9.86 billion, with better numbers showing up in the upcoming quarters," it said. It said during the 1Q10 period, of the RM2.85 billion worth of jobs was awarded, 65.2% was domestic based and 34.8% foreign. The average size per domestic job stood at RM169 million, in line with one of its key sector themes for 2010 that jobs flow will be centred on the mid-small sized ones. OSK Research said contract awards in Sarawak appear to be gaining traction, with Hock Seng Lee (NEUTRAL, TP: RM1.50, Downgrade, given the share price run-up) and Naim (BUY, TP: RM4.21) collectively bagging RM245 million worth of jobs. For the more "popular" jobs, Gadang (NR) secured the LCCT EW2 (RM291m) while IJM (NEUTRAL, TP: RM4.70) was finally awarded the RM600m Besraya extension after almost a year. "Market talk is that the UEM-Bina Puri JV and privately held AHT Norlan-Carriage JV are the finalists for the LCCT terminal building (RM750 million to RM850 million) and satellite tower (RM400 million to RM500 million). Shortlisted contractors that did not make it were Sunway (NR), IJM and Gadang. The Government is also evaluating the proposal for a RM5-6bn highway parallel to the existing NSE connecting Banting (Selangor) and Taiping (Perak), which could eventually be extended all the way to Gelang Patah in Johor. "We think the proposal makes little economic sense as the current NSE is not fully utilised (festive seasons excluded). Furthermore, the completion of the Double Track at end-2013 would already provide an alternative route, especially for cargo flow," said OSK Research. In East Malaysia, there are plans to construct an 11km bridge linking Sabah and Labuan, which could cost RM3 billion (RM6 billion if delayed). "We are sceptical on the feasibility of this project as Labuan's population is a mere 90, 000," it said. Recently, the 60:40 JV between Loh&Loh (NR) and Sinohydro received the LOI for the Hulu Terengganu Dam (RM828 million). The other finalist for the job was Gamuda (NEUTRAL, TP: RM2.75).

SUNWAY - Price Target News

Stock Name: SUNWAY
Company Name: SUNWAY HOLDINGS BHD
Research House: HWANGDBS

KUALA LUMPUR: Hwang DBS Vickers Research (HDBSVR) has a Buy call on Sunway Holdings with a sum-of-parts target price of RM1.95 Sunway had on Thursday, April 1 accepted the letter of award for a RM88 million contract from KLCC Holding Sdn Bhd to build Phase 2 of Impiana KLCC Development. This is an extension to the existing hotel wings comprising an additional three-storey car park podium and 22-storey tower block above the existing four- storey car park podium on Jalan Pinang, Kuala Lumpur The contract is targeted to be fully completed on Nov 2, 2011 with a sectional completion of a link bridge within 43 weeks from the commencement date. "This is Sunway's second contract win for 2010 bringing YTD contract wins to RM110 million. This forms c.14% of our RM800m order win assumption for FY10 and will lift Sunway's orderbook by 4% to RM2.5 billion," said HDBSVR in a research note on Friday. Assuming a margin of 8%, total pre-tax profit over the duration of the contract amounts to RM7 million or 1% and 3% of FY10 and FY11 core pretax profit, it said. "We continue to like Sunway as a small-mid cap pick to the sector. Earnings deliverance has been consistent while other key catalysts are a revival in India infrastructure contracts and the 10MP which would provide more clarity on contract flows," it said.

UNISEM - Price Target News

Stock Name: UNISEM
Company Name: UNISEM (M) BHD
Research House: AMMB

Unisem (M) Bhd
(April 1, RM2.74)
Maintain buy at RM2.68 with higher fair value of RM3.80: We maintain buy on Unisem with higher fair value of RM3.80 per share (RM3.30 previously) based
on price-to-book value (P/BV) of 1.9 times (1.7 times previously).

We rerate our multiple to be in line with a valuation it fetched during its last upcycle circa 2004-2005.
Following our company visit, we are raising out earnings estimate by 19% in FY10 and 41% in FY11 due to a 12.1% increase in revenue, prompted by stronger-than-previously expected order growth. First quarter FY10 alone may see sequential growth of more 9%, and we expect it to continue into 4Q10. Previously, we were only expecting 5%-7% growth. This puts us 43% ahead of consensus.

This takes into account that it still has spare capacity to fulfil demand growth of up to 20%, relative pricing power due to a supply glut, dividend surprise in FY10 and liquidity premium.

Global order strengths have gained traction since our last visit. Measured in sequential quarterly growth, global orders may exceed 45% in 1Q10 (versus 27% in 4Q09).

Within the industry's visible order, we expect pace of growth to strengthen. Industry's book-to-bill ratio has increased to 1.23 (1.07 from our previous visit), following seven consecutive months of above-1 time ratio.

More significantly it is happening in an environment of growing orders. Prior to that, book-to-bill ratio had dipped below one time for almost 35 straight months. It has not gone above 1.2 times since the dotcom bust.

More importantly, Unisem would be a leader in tapping this surge in demand, thanks to its capacity build-up. Unisem's plant in China may have received 10%-15% more orders in 1Q09. Parallel to that, it had not seen significant deterioration in turnover.

Despite global orders for plant equipment having registered around 10% QoQ growth 1Q09, we estimate this would only come on stream by 2Q11.

We are looking at a possible dividend of 10 sen per share, yielding 4.5%. Free cash flow generation should improve from 20 sen per share to 50 sen backed by new earnings estimates and firm capex of RM100 million. - AmResearch, April 1


This article appeared in The Edge Financial Daily, April 2, 2010.

AIRPORT - Price Target News

Stock Name: AIRPORT
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Research House: OSK

KUALA LUMPUR: OSK Research is maintaining its Trading Buy recommendation on Malaysia Airports Holdings Bhd (MAHB) with a target price of RM5.50 based on 16x FY0 EPS. The research house said on Friday, April 2 it was generally pleased with the five-year business direction --"Runway To Success: Building A World-Class Airport Business 2010-2014". The plan is to focus on aeronautical revenue as the backbone supported by a conservative traffic growth of 4.1%. MAHB's aim is to nurture its retail business, expand its horizon to strategic land development and boost its overseas earnings five years from now. The key target is to achieve EBITDA of RM822 million on a base case scenario and RM1.12 billion on an optimistic case for FY14. "Being an airport operator, air traffic growth remains MAHB's underlying fundamental. The company has estimated a base growth rate of 4.1% CAGR from 2008 to 2014, which may offer some upside given the robust growth in the Low Cost Carrier (LCC) segment and other Asian markets," said OSK Research. Nevertheless, as its earnings projection incorporates a potential increase in passenger service charges (PSC) in 2014 as well as 30% increase in landing charges plus other aeronautical charges in May 2011, OSK Research said it may see some road blocks covered by the Marginal Cost Support (MARCS) agreed to by the Government under the Operating Agreement (OA). The research house said MAHB has big plans to raise for its non-aeronautical contribution to 67.1% by 2014, or by an absolute revenue of RM2.1 billion, from RM860.6 million. The company has a strong retail and commercial team that has successfully implemented its past Retail Optimization Plan (ROP). Going forward, the company has established clear plans to grow the retail business by introducing the right products at the right locations. MAHB has identified 2,730 acres of land surrounding the KLIA for land development. "While the management has guided for rental on the high side and has a bullish revenue projection of RM112 million by FY14, we are upbeat on its potential, given its previous success in developing Malaysia International Aerospace Centre (MIAC) at Subang Airport. "The company has also been slowly building its name in airport management overseas, having 3 such ventures under its belt. The management is also bidding for two airport management jobs in Asia, and hopes to secure these by year-end. However, these investments will bear fruit only after a five-year gestation period," it said.

NAIM - Price Target News

Stock Name: NAIM
Company Name: NAIM HOLDINGS BHD
Research House: OSK

KUALA LUMPUR: OSK Research is retaining its OVERWEIGHT rating on Malaysian contractors driven by expectations of more positive news flow. Its top picks are Mudajaya (BUY, TP: RM6.48) for its strong earnings growth and WCT (BUY, TP: RM3.08), as it believes more contracts are in the pipeline. It also likes Naim (BUY, TP: RM4.21) for thematic Sarawak play but downgrade Hock Seng Lee (NEUTRAL, TP: RM1.50), owing to the recent run-up in its share price. OSK Research said on Friday, April 2 that over the 1Q10 period, about RM2.85 billion worth of jobs was awarded. Domestic contracts showed a healthy 16% y-o-y increase but contracted by 38% q-o-q due to the high base effect. "We believe the domestic contract flow will exceed last year's RM9.86 billion, with better numbers showing up in the upcoming quarters," it said. It said during the 1Q10 period, of the RM2.85 billion worth of jobs was awarded, 65.2% was domestic based and 34.8% foreign. The average size per domestic job stood at RM169 million, in line with one of its key sector themes for 2010 that jobs flow will be centred on the mid-small sized ones. OSK Research said contract awards in Sarawak appear to be gaining traction, with Hock Seng Lee (NEUTRAL, TP: RM1.50, Downgrade, given the share price run-up) and Naim (BUY, TP: RM4.21) collectively bagging RM245 million worth of jobs. For the more "popular" jobs, Gadang (NR) secured the LCCT EW2 (RM291m) while IJM (NEUTRAL, TP: RM4.70) was finally awarded the RM600m Besraya extension after almost a year. "Market talk is that the UEM-Bina Puri JV and privately held AHT Norlan-Carriage JV are the finalists for the LCCT terminal building (RM750 million to RM850 million) and satellite tower (RM400 million to RM500 million). Shortlisted contractors that did not make it were Sunway (NR), IJM and Gadang. The Government is also evaluating the proposal for a RM5-6bn highway parallel to the existing NSE connecting Banting (Selangor) and Taiping (Perak), which could eventually be extended all the way to Gelang Patah in Johor. "We think the proposal makes little economic sense as the current NSE is not fully utilised (festive seasons excluded). Furthermore, the completion of the Double Track at end-2013 would already provide an alternative route, especially for cargo flow," said OSK Research. In East Malaysia, there are plans to construct an 11km bridge linking Sabah and Labuan, which could cost RM3 billion (RM6 billion if delayed). "We are sceptical on the feasibility of this project as Labuan's population is a mere 90, 000," it said. Recently, the 60:40 JV between Loh&Loh (NR) and Sinohydro received the LOI for the Hulu Terengganu Dam (RM828 million). The other finalist for the job was Gamuda (NEUTRAL, TP: RM2.75).

DIGI - Price Target News

Stock Name: DIGI
Company Name: DIGI.COM BHD
Research House: OSK

KUALA LUMPUR: OSK Research is maintaining its Neutral on DIGI.COM BHD [] based on target price of RM23.10. It said on Thursday, April 1 that valuation-wise, the stock trades at 16.4x FY10 earnings, at the higher end of its regional peers. The key share price re-rating catalysts going forward are capital management and better than expected results. OSK Research said DiGi had ingeniously customised its iPhone packages to cater for a larger addressable market of potential iPhone users. "Overall, we believe its plans are attractive and would entice existing 2G/3G subscribers to upgrade or recontract their plans and stoke interest among current users of alternative smartphones and regular 2G/3G handsets," it said. DiGi's entry level iPhone plan (iDigi88) comes with a monthly access of RM88, which is lower than Maxis' RM100 (IV1 plan). It is also offering two other plans, priced at RM138 and RM238, which competes with Maxis' RM155 and RM255 packages. DiGi is making the iPhone more affordable by lengthening the lock-in period to 36 months versus the maximum 24 months for Maxis. An "all-in-one" monthly extended package (handset inclusive), allows the cost of the handset to be "defrayed' over an additional 12 months via an easy payment scheme with 0% interest. "On a like for like comparison, (based on the 24-month contract), our calculation suggests that the effective monthly commitment is 4%-9% lower for Digi. We note that DiGi fully subsidises the older 3G 8GB model for its top tier plan," it said.

TOMYPAK - Price Target News

Stock Name: TOMYPAK
Company Name: TOMYPAK HOLDINGS BHD
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research is maintaining its Overweight on the companies in the flexible packaging sector and continue to rate Daibochi and Tomypak as Outperforms. It said on Thursday, April 1 companies in its coverage, Daibochi and Tomypak, demonstrated their ability to pass on rising raw material costs to their customers, going by the double-digit pretax margins they recorded for four straight quarters. "This profit margin trend should continue in 2010, driven by similar catalysts as in 2009, which included food safety and rising demand for metallised film," it said. CIMB Research said it made no changes to its earnings numbers or target prices. Daibochi's target price of RM4.60 is based on 12x CY11 P/E. For Tomypak, it value the stock at a 30% discount to Daibochi, i.e. 8x CY11 P/E. This gives an unchanged target price of RM4.66 for Tomypak. Potential re-rating catalysts for both stocks include i) further margin expansion over the next few quarters, ii) contracts from major non-F&B companies and, iii) attractive dividend yields of 5%-6%.

DAIBOCI - Price Target News

Stock Name: DAIBOCI
Company Name: DAIBOCHI PLASTIC & PACKAGING
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research is maintaining its Overweight on the companies in the flexible packaging sector and continue to rate Daibochi and Tomypak as Outperforms. It said on Thursday, April 1 companies in its coverage, Daibochi and Tomypak, demonstrated their ability to pass on rising raw material costs to their customers, going by the double-digit pretax margins they recorded for four straight quarters. "This profit margin trend should continue in 2010, driven by similar catalysts as in 2009, which included food safety and rising demand for metallised film," it said. CIMB Research said it made no changes to its earnings numbers or target prices. Daibochi's target price of RM4.60 is based on 12x CY11 P/E. For Tomypak, it value the stock at a 30% discount to Daibochi, i.e. 8x CY11 P/E. This gives an unchanged target price of RM4.66 for Tomypak. Potential re-rating catalysts for both stocks include i) further margin expansion over the next few quarters, ii) contracts from major non-F&B companies and, iii) attractive dividend yields of 5%-6%.

DAYANG - Price Target News

Stock Name: DAYANG
Company Name: DAYANG ENTERPRISE HOLDINGS BHD
Research House: HWANGDBS

KUALA LUMPUR: Hwang DBS Vickers Research believes Dayang is among the frontrunners to clinch some major oil & gas maintenance jobs to be awarded this year The research house said on Thursday, April 1 that several major maintenance jobs are expected to come on-stream this year. "We believe Dayang has a strong chance of securing some of these contracts, and to date has participated in several, notably the RM400 million SSB/SSPC contract," it said. Other contracts up for grab include Petronas Cargill's RM1.5b 5-year maintenance work and RM400m ExxonMobil contract. Dayang is the incumbent in some of these recurrent jobs and OSK Research believes its track record would stand the company in good stead as potential beneficiaries. "We expect earnings growth to be supported by active order book replenishment and maiden contribution from Borcos. We have assumed contract wins of RM500m for FY10. Dayang current work orders of RM520 million would keep the company busy till 2012, while Borcos has 80% of its vessels locked under long term charter contracts (1-3 years)," it said. Dayang is a good proxy to East Malaysia oil & gas play given its track record and growth story. "We initiate coverage with a Buy call and 12-month target price of RM2.60/share, pegged to 11x FY11F EPS. Dayang offers decent FY11F net yield of 2.7%, as well as superior margin (FY09 EBIT of 25.8%) relative to the sector (19.4%). The stock is currently trading at FY11F PE and PBV of 8.0x and 1.6x, respectively," it said.